The Truth about the Massive 2022 Great Recession.

is the great reset upon us and has the

great reset now been fully priced into

the stock market let's talk about the

great reset the stock market and what to

expect going forward

let's start

first we are experiencing the greatest

inflation that we have seen in the last

40 years with expectations that at least

in the united states the peak has not

been achieved yet in fact the next cpi

data set for july is expected to come in

even higher than that of june

the same is true in markets around the

world we are fighting substantial

inflation to which central banks around

the world more than 70 percent of them

are raising interest rates quickly to

tighten financial conditions compress

the wealth of individuals so that

finally they spend less money and

hopefully inflation goes down because

the worst thing for an economy is

runaway inflation because it leads to

the collapse of currencies

well folks

this is also compounded by the fact that

individuals incomes because of high

inflation

is plummeting this is a chart of changes

in real wages versus 2021. we've got the

united states marked in blue here you

can see we're doing far better than the

rest of the world where places like

italy spain and greece are having

substantially larger decreases in wages

and so naturally it makes a lot of sense

that misery throughout the world is

rising substantially in fact if you take

a look at the covid spike of misery

right here we are slowly approaching

those levels of misery again

these are the misery indices for in

white the united states in blue the

united kingdom and in orange the

eurozone but before we draw any

conclusions i have to remind you to

enjoy this slide here that suggests that

more than 70 percent of those in the

united states believe a recession will

happen by the end of 2022

with another 9 so a total of 80 percent

of individuals believing we'll see a

recession between now

and 2023 and this is where you want to

make sure to take advantage of the data

the atlanta fed provides to us take a

look at this now updated as of today

atlanta fed gdp now real gdp estimate

for the second quarter of 2022

it provides that for the entire first

half of the year we actually had

negative gdp potentially this is not the

official figure of negative 1.7

unfortunately a negative gdp for two

quarters in a row or two sets of three

months in a row in other words

potentially the first half of 2022

implies that we already are in a

technical recession the gdp now index

has slightly moved up as you can see

here from negative 2.1 percent to

negative 1.9 with an average of a

negative 1.7 percent read for the entire

first half and folks unsurprisingly the

bond market which often can predict what

happens in markets and financial

conditions is telling us that we're due

for another recession see when this

chart has a negative read as you can see

it has right here a negative read which

was once seen here

again seen here and again seen here

tends to come right before these red of

vertical bars these red vertical bars

represent recessions and folks take a

look at this we have once again

inverted

in the spread between the two year and

five-year treasury yields now you don't

have to know exactly what that means

just know that when this chart behaves

this way it tends to precede a recession

and that's why this chart is so

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especially since we have a massive

lecture set coming out tomorrow but

folks the bond market tells us in

multiple ways that a recession is around

the corner i just showed you the spread

between the two year and the five year

well we also have a spread of the ten

year versus the two year which is

sometimes considered an even more

reliable indicator of a recession coming

when a two-year treasury yield is more

expensive in the short term than a

10-year treasury yield we get an

inverted curve and we had that here on

april 1st we had that very briefly here

for a few hours and take a look how

deeply we have presently inverted

the bond market is telling us a

recession and a great reset

is here and coming and so it's no

surprise that in real estate we are

seeing the number of homes with active

price drops skyrocketing which is a

prelude to actual reductions in sales

prices and potentially negative real

estate gains but we're also seeing

investors in the stock market turn to

hedges

buying puts and taking up options on the

vix

the vix is known as the volatility or

fear index and the more we see investors

via this white line take up positions or

bets on the vix

the more investors are telling us we

think more bad might be around the

corner you could take a look at this

chart here and you could see that we

have seen the largest amount of

purchasing of call options in the vix

which means individuals are making a lot

of bets that volatility and fear is

about to skyrocket and they are doing so

at the highest levels that we have seen

since the covid panic

folks

that is a red flag that at least the

institutional investors and hedge funds

believe more pain is ahead

after all we have not seen what's known

as a cathartic flushout yet in the stock

market

this orange line set here

represents spikes in the fear index it's

inverted so the more it goes down the

more fear there is in this case it's

upside down right it's inverted and you

can see these massive fear spikes

once here during the dot-com era you

could see the fierce spike here during

the great recession you could see the

beginning of the taper tantrum here the

continuation of the taper tantrum

slightly over here the covet pandemic a

panic here and look at where we sit now

really a massive lack

of fear

a lack of what folks are calling for

which is that cathartic flush-out that

says fear and capitulation is now at

such a high level that now is

potentially the time to buy but we

haven't seen that yet however folks

take a look at the logarithmic chart of

the s p 500 going all the way back my

friends to

right here

the great

depression 1930.

what we see here is a lot of pain over

time in various different cases you

could see a 22 drop in 1.2 years here a

28 drop in six months a 22 drop in eight

months a 36 drop in a year and a half 48

drop in a 1.8 years 27 drop in 1.8 years

look at this one 36 down in two months

folks we sit right here

25 down

in

five

months

and this logarithmic chart shows us

that over time

what happens folks

stonks do

this

now that's not to say that this is the

bottom of the market or that you should

hop in with everything you have and it's

time for yolo call options and it's time

to get into margin no in fact i'm very

proud to say that right now

i have zero margin i'm completely out of

margin and i recommend that you be

completely out of margin as well because

if we do get a capitulation panic and we

do get a cathartic flush out you might

not survive this line

if we end up getting a deep spike over

here to the downside and you're heavily

margined you could get wiped out and the

key in this market is to survive

you want to be a survivor

and folks what are people doing right

now who potentially want to survive but

are making bets on beating down stocks

we'll take a look at this

arc is seeing a burst of inflows

here you can see the price of the arc

etf has risen just recently

and

as this rise has occurred

so has by the dipping in arc k

this is the most consistent stretch of

by the dipping that we have seen in the

entire

year you can see this by simply counting

the bars four bars plus this little one

here is actually a plus that's five bars

this is eight bars of positive net

inflows into arc that is the longest

stretch that we have actually had since

january where we had four bars in a row

otherwise all the bars going down were

net outflows so you can see that

consistent by the dipping is happening

right now and people are placing bets on

innovation on sold off technology trades

even warren buffett is buying the dip

warren buffett is of course buying the

dip in oscillator petroleum with now a

total share count of over 17.6 ownership

in the company but take a look at how

warren buffett buys he buys when people

are fearful he's greedy as they say when

people are fearful

and he actually does so sure he bought

here on the rise at the beginning of the

war

but he bought the dip here

he bought the dip here he bought the dip

here he bought the dip just a few days

ago warren buffett is buying

individuals while some institutions are

hedging individuals are buying

innovation they're buying the future of

america

and it makes sense because what are we

seeing we are seeing the highest

fall

in technologies and why is that folks

it's because some folks are saying the

end of june saw the highest amount of

outflows of technology or money and

technology funds and that maybe now is

officially the time to go in and buy the

dip then maybe the bottom is in in

the way we're going to buy the bottom is

we're going to buy while hedging for a

volatility spike and why are people

doing that why are people all of a

sudden buying the dip

well it's because we're finally actually

starting to see some signs that maybe

inflation

could be transitory now that sounds very

offensive to a lot of folks because the

idea that inflation is transitory sounds

like a hoax it sounds like a lie they

told us that after the covet pandemic

and the panic of covid that we might

have some transitory reopening inflation

first because of who remembers the

phrase base effects where when we

compare back to the prior year we

compare into a hole the base effects

tell us oh we should have high inflation

but they also tell us that hey wait a

minute not only do we have this but we

have a reopening so people are going to

spend money again as we reopen

well this was the first potential sign

of inflation coming and going

unfortunately this sort of balloon of

inflation even though we had declines in

inflation in the summer of 2020

what ended up happening in the fall of

2020 we got the delta variant

and we immediately destroyed supply

chains with chinese shutdowns again

coveted pandemic first delta variant

next

what came after the delta variant folks

omicron to destroy supply chains once

again and really put a nail in the

coffin of supply chains

covid was now lasting

inflation was lasting

so what happened thereafter

we got a war

that didn't end up ending in may like

many had hoped including myself

but is now potentially lasting for the

rest of the year and so folks are

finally looking back to signs that maybe

inflation has potentially peaked

here is a chart showing us commodity

prices and how they moved from 2021 to

2022 you can see massive moves in

commodity prices up 45 food prices up 68

oil prices up 148 and metal prices up

100 and sorry 56

but what have we also seen

since the peak in the second quarter of

2022

declines across the board commodity

prices down eight percent food prices

down eight percent burnt down eight

percent and metal prices down 23

some are now saying that the peak

is in

and if the peak is in in commodities

then maybe we'll actually start seeing

gas prices come down as well

and that's exactly what we've seen we've

started seeing gas prices come down

so

what does this mean

and is there potentially a really

important chart that we have to pay

attention to and understand because it

could be a signal of what's right around

the corner which could be critical to

your investing future

absolutely we're going to talk about

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molly fool today now before i show you

the chart that is so critical

let me just reiterate to you falling

commodity prices this is the bloomberg

commodity price index commodities are

huge leading factor in inflation

commodities go down first

then input costs fall

then we see producer prices fall

then we see consumer prices fall and so

what are we seeing we are seeing almost

all of the gains of commodity prices

since february being eradicated and so

now let's take a look at what becomes

extremely important for your investing

future first you have to understand the

foundation of this graph because it's

about to get more complicated and i want

you to follow along with this this is

the bond market's estimation of future

inflation it's called the five-year

break-even chart and it measures the

difference between the five-year

treasury and the five-year tips which is

an inflation-protected security

now don't worry about the complicated

details of how that works just know that

as this line goes down the market is

screaming we think inflation is about to

plummet in fact we are now at the lowest

level in the five-year break-even chart

that we have seen since folks look at

this

last

july

that's remarkable we are at such low

levels now of inflation expectations

that we have eradicated

all of over here the delta expectations

of inflation and the war expectations of

inflation they're gone

but now we need to overlay something

very important

this

is the five-year break-even chart that's

the white line that you just saw it's

the same one

zoomed out all the way back to 2020 or

2014. so this is the same white line

that you saw here and these orange lines

here representing this fall

are right

here this is that fall that you saw

zoomed in on

now

why is this chart so remarkable well

this chart is so remarkable because we

took the five-year break-even and

slapped on top of it the blue line the

blue line represents year-over-year

inflation

and what i want you to see is the

inflection points that happen in this

chart let's go over here together

see this inflection point right here you

can see the white line the five-year

breakeven line

in flex up

right before we get an inflection up in

the green

over here the same thing you see the

white line and flex up right before the

blue line and flex up you can see that

again here the white line inflects up

inflation and flex up you see that here

the white line inflects down the blue

line or inflation and flex down shortly

after

then the white line bottoms and then

flex up shortly after the blue line

comes up

then we get an even more steepening in

the break even expectations we get a

steepening in the blue line this is over

the past eight years it's been very

consistent and yeah there is an

opportunity right here to say that one

fell before the other

but frequently

a massive inflection in one is followed

by a massive inflection in the other

and so what do we have right here folks

at this tippy top here we have a massive

inflection point in the white line which

has now gone all the way down to this

orange box here

what has not come down yet is the blue

line

however

if this chart is correct we are about to

see inflation via the blue line

potentially peak

but then plummet

if inflation plummets then the federal

reserve can be less aggressive in

tightening monetary policy and the

federal reserve might say you know what

now our goal is to avoid a recession or

to minimize a recession let's support

the economy again rather than hurting

the economy and you know what that means

stonks go burr this is that same chart

without my drawings on it but showing

you it's not just the five-year break

even which is the white line but it's

also the 10-year breakeven the orange

line which shows you the same style of

inflection points

and folks

what are people doing

well in the first half retail investors

said you know what

we're seeing this as the opportunity of

a lifetime to buy stocks bank of america

security clients were net buyers of u.s

equities towards the end of the second

half or the first half for the first

time in four weeks institutional clients

like pension funds were also the largest

net buyers and the only ones who are

still selling are stupid hedge funds i

mean sorry just hedge funds bloomberg is

now reporting that our pmi reports are

still coming in high but they're not

representing the plummet that we're

seeing in commodities yet remember what

happens first commodities plummet

then after a delay you see producer

prices plummet price expectations paid

plummet and then cpi inflation comes

down which is your consumer inflation

and this is where folks

we have to talk about

one more thing

what should you invest in

well potentially something for you to

invest in during this time

is investing in something like electric

vehicles electric vehicles already

represent a more than six percent of the

us car market with a parade of new

models that's about to ramp quickly

including elon musk who just this

morning suggested that maybe

tesla's next foray should be a personal

and cargo van

and elon musk in the past has expressed

his admiration for the mercedes sprinter

these are vehicles that should be very

easy to build they're not complicated

like the cyber truck and they sell for a

beautiful and delicious premium

folks

right now the leader in electric

vehicles is tesla beating even byd and

the other electric automakers throughout

the world

tesla is growing its sales year over

year while all other companies are

seeing declines in sales even ford who

suggests that oh don't worry

we are selling hand over fist ford

monkeys yeah well you know what else is

happening with ford ford isn't able to

make a profit here's an article from

june 15th from bloomberg

ford motor companies hot selling mustang

machi electric suv and other plug-in

models are being rendered unprofitable

by the rising cost of raw materials

which fortunately have started coming

down but in this environment ford can't

keep up with pricing power to actually

make a profit

in fact their chief financial officer

says we actually had a positive bottom

line profit when we launched the car but

then commodity costs wiped that out

in fact the more evs that ford says the

more ford says you're going to see

pressure on the bottom line when we

launch our evs they're not going to be

positive really so now you're going to

sell cars at a loss just to say you're

selling cars well at least you're not

toyota because toyota right now

literally is issuing a recall because

wheels are falling off their electric

vehicles

oh well and when we look at bloomberg's

score bloomberg a publication that

usually bags on tesla when we look at

bloomberg's equation for the most

fuel-efficient vehicles that exist what

do we get folks the best green score

models are

first the tesla model 3 the most

affordable tesla followed actually by

the lucid then the model s

the bolt the model y

and then towards the end of the list

some other contenders like the kia and

of course the substantially larger and

heavier tesla model x

so folks the question now for you is

if the great reset has come and gone

is it time to buy

what are you doing with your portfolio

personally i have no margin and i am

honored to take the money that i have

to buy

if you want to see exactly what trades

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